Assistant Commissioner of CGST & Central Excise Vs Shreeji Enterprise (GSTAT Surat)
Summary: The Goods and Services Tax Appellate Tribunal (GSTAT), Surat Bench, held that GST was not leviable on the assignment of leasehold rights in industrial plots allotted by the Gujarat Industrial Development Corporation (GIDC) to third-party assignees for consideration. The Division Bench comprising Judicial Member Sanjaykumar Dwivedi and Technical Member Rameshkumar G. Hadvani dismissed two departmental appeals against Shreeji Enterprise and Kajalben Hiteshbhai Malaviya, proprietor of Sargam Enterprise, and upheld the orders of the Commissioner (Appeals). The Tribunal followed the binding judgment of the Gujarat High Court in Gujarat Chamber of Commerce and Industry Vs Union of India, R/Special Civil Application No. 11345 of 2023, decided on 3 January 2025.
In the Shreeji Enterprise matter, the taxpayer had assigned leasehold rights in a GIDC plot, with the final transfer order issued on 24 October 2017. The department issued a show cause notice dated 18 July 2024, treating the assignment as a taxable service under SAC 99979 and Serial No. 35 of Notification No. 11/2017-Central Tax (Rate), proposing GST at 18%. Valuation was proposed under Section 15(4) of the CGST Act read with Rule 31 of the CGST Rules. The department also invoked Section 74(1) and proposed penalties under Section 122(1), alleging suppression and failure to report the transaction in GSTR-3B.
The Tribunal noted that the Gujarat High Court had already held that assignment of GIDC leasehold rights represented a transfer of benefits arising from immovable property and did not attract GST under the statutory provisions governing supply. It also referred to the Bombay High Court’s decision in Aerocom Cushions Private Limited Vs Assistant Commissioner (Anti-Evasion), Nagpur, dated 9 January 2026, which adopted the Gujarat High Court’s reasoning and rejected the classification of such assignments as miscellaneous services.
The department acknowledged that the Gujarat High Court judgment covered the dispute but argued that review proceedings were being contemplated after dismissal of the departmental special leave petitions. The Tribunal recorded that the Supreme Court had dismissed the relevant SLPs on 22 May 2026 and 21 July 2026. It held that the proposed review did not diminish the binding effect of the jurisdictional High Court judgment in the absence of any stay or recall.
Accordingly, the Tribunal dismissed both Revenue appeals and upheld the appellate orders. Since the transactions were held not liable to GST, the Tribunal found it unnecessary to decide whether Section 74 or the penalty provisions under Section 122(1) had been correctly invoked.
List of Cases Discussed:
1. Gujarat Chamber of Commerce and Industry Vs Union of India (Gujarat High Court); R/Special Civil Application No. 11345 of 2023; 03/01/2025. Followed as binding jurisdictional precedent. The High Court held that assignment of leasehold rights in GIDC land to a third-party assignee for consideration constitutes transfer of benefits arising from immovable property and does not attract GST under Section 7 read with Schedule II, Schedule III and Section 9 of the GST Act.
2. Aerocom Cushions Private Limited Vs Assistant Commissioner (Anti-Evasion), Nagpur (Bombay High Court); 2026:BHC-NAG:348-DB; 09/01/2026. Followed. The Bombay High Court agreed with the Gujarat High Court that assignment of industrial plot leasehold rights does not attract GST and rejected the department’s attempt to classify such assignments under miscellaneous services.
3. Departmental SLP against Aerocom Cushions Private Limited (Supreme Court); SLP (C) No. 18772/2026; 22/05/2026. Considered. The Supreme Court declined to interfere with the Bombay High Court judgment and dismissed the special leave petition.
4. Departmental SLPs against Gujarat Chamber of Commerce and Industry (Supreme Court); Diary No. 33270/2025; 21/07/2026. Considered. The Supreme Court dismissed the petitions in view of the dismissal of the similar SLP concerning Aerocom Cushions.
FULL TEXT OF THE ORIGINAL GSTAT ORDER
1. These two appeals have been filed by the department against Orders-in-Appeal by which the Appellate Authority has upheld the orders of the Adjudicating Authority. The Show Cause Notices had demanded GST on assignment by the Respondents, to a third party, of leasehold rights in the plots of land allotted on lease by the Gujarat Industrial Development Corporation (GIDC). Following the judgment dated 03.01.2025 of Hon’ble Gujarat High Court in Gujarat Chamber of Commerce and Industry vs. UOI (R/Special Civil Application No. 11345 of 2023) the Adjudicating Authority held that GST is not leviable on the transaction. The Appellate Authority upheld those orders.
2. Before proceeding further, we note that the names of the parties in the cause titles appearing on the GSTAT Portal are erroneous. We are informed that this is on account of the present design of the portal and that the Registry is unable to correct it. We have, therefore, corrected the cause titles as shown in the table below. Other details, such as the address and GSTIN etc. remain unchanged:
| Sr. No. | Appeal No. | Cause Title as appearing on the portal | Cause Title as corrected and mentioned in this order |
|---|---|---|---|
| 1. | APL/SRT/081/2026 | K Dharamveer Chowhan Versus Shreeji Enterprise |
Assistant Commissioner of Central GST, Division-IX, Ankleshwar, Vadodara-II Versus Shreeji Enterprise |
| 2. | APL/SRT/086/2026 | K Dharamveer Chowhan Versus ……. (a blank) |
Assistant Commissioner of Central GST, Division-IX, Ankleshwar, Vadodara-II Versus Kajalben H. Malaviya |
3. For convenience, the facts are taken from Appeal No. APL/SRT/081/2026 (Commissioner of CGST, Vadodara-II vs. Shreeji Enterprise).
3.1. Briefly stated, the facts are that the Respondent Shreeji Enterprise is a proprietary concern of Shri Jamnadas Gordhan Mathukia registered under GST. Earlier, he also operated under the trade name J.G. Pharma Chem.
3.2. The Respondent transferred, for consideration, his leasehold rights in a plot of land leased by GIDC. GIDC issued the Final Transfer Order on 24.10.2017. A Show Cause Notice dated 18.07.2024 was issued alleging that the transaction amounted to supply of service classifiable under the Services Accounting Code 99979 as “Other Miscellaneous Services” and that tax at the rate of 18% was leviable thereon under Sr. No. 35 of the Notification No. 11/2017-CT (Rate), dated 28.06.2017. The notice, accordingly, demanded tax along with interest. The value of the alleged supply was determined on the basis of the rate chart of GIDC by invoking Section 15(4) of the CGST Act, 2017 read with Rule 31 of the CGST Rules, 2017. The notice alleged that the Respondent knew that the transaction was not a sale of land but transfer of leasehold rights, which is leviable to GST; that the Respondent neither raised bill or supply nor reported the transaction in their GSTR-3B; and that the fact of receipt of consideration for the transaction was suppressed with intent to evade tax. It was further alleged that he had not reported the transaction even as “Other outward supplies (Nil rated, Exempted) or as “non-GST outward supplies” in the form GSTR-3B. On that basis, the notice invoked Sec 74(1) of the CGST Act, 2017; and proposed penalty was proposed under Section 122(1)(i), 122(1)(xi) and 122(1)(xv) read with Section 74(1) thereof.
3.3. The Adjudicating Authority dropped the demand, relying on the judgment of the Hon’ble Gujarat High Court in Gujarat Chamber of Commerce and Industry, supra. The appeal filed by the department under Section 107 was dismissed by the Appellate Authority. Hence, the present appeal.
4. Mr. Maya Shanker Prabhat, learned Superintendent (Authorised Representative) appearing for the department reiterates the grounds raised in the appeal memo and submits that the appeals were filed because the department had filed a Special Leave Petition (SLP) before the Hon’ble Supreme Court against the judgment in Gujarat Chamber of Commerce. He further submits that although the SLPs filed by the department have since been dismissed by the Hon’ble Supreme Court, the department is in the process of filing a review petition.
5. No one appeared for the Respondent.
6. We have heard the Authorised Representative for the department and perused the record.
7. The learned AR does not dispute that the present case is squarely covered by the judgment in Gujarat Chamber of Commerce and Industry, supra. In that case, the issue was whether GST is leviable on assignment of leasehold rights of the plot of land allotted on lease by Gujarat Industrial Development Corporation (GIDC) and building constructed thereon, by the lessee or its successor (assignor) to a third party (assignee) on payment of lump-sum consideration considering the same as supply of service under the provisions of Central/State Goods and Services Tax Act, 2017. The Hon’ble High Court held:
83. In view of foregoing reasons, assignment by sale and transfer of leasehold rights of the plot of land allotted by GIDC to the lessee in favour of third party-assignee for a consideration shall be assignment/sale/transfer of benefits arising out of “immovable property” by the lessee-assignor in favour of third party-assignee who would become lessee of GIDC in place of original allottee-lessee. In such circumstances, provisions of section 7(1)(a) of the GST Act providing for scope of supply read with clause 5(b) of Schedule II and Clause 5 of Schedule III would not be applicable to such transaction of assignment of leasehold rights of land and building and same would not be subject to levy of GST as provided under section 9 of the GST Act.
84. In view of above, question of utilisation of input tax credit to discharge the liability of GST on such transaction of assignment would not arise.
85. The petitions accordingly succeed and impugned show cause notices and orders in original or appeal as the case may be, are hereby quashed and set aside. Rule is made absolute to the aforesaid extent. No order as to costs.
7.1. The issue also came up before the Hon’ble Bombay High Court in Aerocom Cushions Private Limited vs. Assistant Commissioner (Anti-Evasion), Nagpur [2026:BHC-NAG:348-DB]. Agreeing with the decision of the Hon’ble Gujarat High Court in Gujarat Chamber of Commerce and Industry, supra, Hon’ble Bombay High Court by its judgment dated 09.01.2026 held:
13. ……… We subscribe to this view for the reasons quoted in earlier part of our judgment so also because the view, in our considered opinion, is in consonance with the provisions of law on supply of services.”
14. ……… Further we subscribe to the finding of Gujarat High Court that the assignment by sale and a transfer of leasehold rights of the plot of land allotted by the Corporation like GIDC or MIDC to the lessee in favour of third party-assignee for a consideration shall be assignment/sale/transfer of benefits arising out of immovable property by the lessee-assignor in favour of third party and in such circumstances, the transaction would not be subject to levy of GST in terms of the GST Act.
15. The writ petition is accordingly allowed. Show cause notice No.47/AC/GST/NGP-I/2024 dated 20-12-2024 issued by respondent No.1 is quashed and set aside.
7.2. On the question of applicability of Sr. No. 35 of Notification No. 11/2017-CT (Rate), the Hon’ble Bombay High Court observed1:
8. Our attention is invited to the entry at Sr.No.1 which includes other services (washing, cleaning and dyeing services; beauty and physical wellbeing services, and other miscellaneous services including services nowhere else classified). As could be seen, the services include miscellaneous services like washing, cleaning, dyeing, beauty, physical well-being, etc. Such petty services, in our view, cannot be extended to assignment of leasehold rights in an immovable property, to term it to be other miscellaneous services as classified under clause at Sr. No.35 of the Notification.
7.3. The Special Leave Petition (SLP (C) No. 18772/2026) filed by the department against the judgment in Aerocom Cushions was dismissed by the Hon’ble Supreme Court by order dated 22nd May 2026, which reads:
“We are not inclined to interfere with the impugned judgment and order of the High Court, hence, the special leave petition is dismissed.”
7.4. The Special Leave Petitions (Diary No. 33270/2025) filed by the department against the judgment in Gujarat Chamber of Commerce, were dismissed by the Hon’ble Supreme Court by order dated 21st July 2026, which reads:
1. Delay condoned.
2. This Court, vide order dated 22.05.2026, has already dismissed a Special Leave Petition, being SLP (C) No. 18772/2026.
3. In view of the fact that a similar SLP has been dismissed, the instant special leave petitions are dismissed.
4. Pending application(s), if any, shall stand disposed of.
7.5. In view of the above, the judgments of Hon’ble Gujarat High Court, which is the jurisdictional High Court, holds the field and binds the Tribunal. The department’s stated intention to seek a review does not dilute its binding effect, there being no order staying or recalling it.
8. We accordingly hold that GST is not leviable on the transactions in question.
9. In view of this finding, the question whether provisions of Section 74 and 122(1)(i), 122(1)(xi) and 122(1)(xv) were rightly invoked in the facts of these cases, do not survive for our consideration.
10. The appeals filed by the department are accordingly dismissed, and the Orders-in-Appeal are upheld.
(Operative part of the order pronounced in open court on 29th September 2026).
Note:
1 The reference to “Sr. no. 1” in the first sentence of paragraph 8 of the judgment of the Hon’ble Bombay High Court appears to be a typographical error. A reading of the judgment as a whole makes it clear that the discussion relates to Sr. No. 35.
